SIX HOLDINGS (“TOP 6”)/BEKA-SCHRÉ INTRODUCTION

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FINAL REPORT: PASSENGER RAIL AGENCY OF SOUTH AFRICA/SA FENCE

AND GATE INVESTMENT HOLDINGS (“SAFNG1”)/TOP

SIX HOLDINGS (“TOP 6”)/BEKA-SCHRÉDER (“BEKA”)

1. INTRODUCTION

1.1. This report reflects on an investigation being conducted on behalf of the

Board of the Passenger Rail Agency of South Africa (PRASA) into

allegations emanating from findings of the Auditor General of South

Africa (AGSA), the Public Protector (PP) and subsequent discoveries

during these investigations.

1.2. The investigation focuses on the various projects and service providers

of PRASA with respect to any instances of fraud, corruption, irregular,

fruitless and wasteful expenditure incurred by PRASA employees (past

or present) and/or implementing agents, contractors and/or

subcontractors and/or associated persons and entities and any irregular

and/or unlawful activity relating to the management, implementation

and administration of such projects and services rendered.

1.3. The investigation is being conducted with the benefit of legal privilege,

arising between the Board of PRASA and Werksmans.

1.4. This report (in whole or in part) may not, without our prior written

consent –

1.4.1. be transmitted or disclosed to or be used or be relied upon by any

other person or entity whatsoever for any purposes whatsoever; or

1.4.2. be quoted or referenced to or made public or filed with any third party

for any purposes whatsoever, except, in either case to the extent that

PRASA is required to disclose this report by reason of any law,

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regulation or order of court or in seeking to establish its cause of

action/defence in any legal or regulatory proceedings or investigations.

1.5. This is a progress report on key aspects under investigation.

2. METHODOLOGY

2.1. The process followed in compiling this report consisted of the collection

of raw information from various open source databases and the

Internet.1

2.2. Where so required, underlying documents and data relied upon can be

made available on request.

2.3. This process includes scrutiny of over one billion separate pieces of

internally collected data in the form of documents, investigation-results

and audit-results.

2.4. The raw information is then collated into a single format which depicts

basic information relating to each entity under scrutiny.

2.5. The collated information is then analysed with a view to determine any

obvious indicators of potential risk.

2.6. This report reflects the analysed conclusions of potential and actual risk

between levels 1 to 5 thus far (out of 5 possible levels).

2.7. Level 1 risk factors reflect clinical indicators of any adverse financial

records as registered on the databases. These would include:

2.7.1. Judgments obtained with respect to outstanding debt obligations;

1 TransUnion (credit bureau); XDS (credit bureau); SearchWorks (corporate registry); Windeed LexisNexus

(corporate and deeds registry); Deeds (deeds registry); Internet open source material; Social media platforms (where applicable) – veracity of data is dependent on service provider

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2.7.2. Material default payments to third parties.

2.8. Level 2 risk factors reflect the result of an analysis of the integrated and

collated data. This process entails the objective consideration of less

obvious factors which may suggest risk. These would include:

2.8.1. Potential risk reflected in registered fixed assets and credit facilities;

2.8.2. Any potential lifestyle or financial risk factors.

2.9. Level 3 risk factors reflect on any additional risk factors concluded

through the subjective analysis of the integrated data. These would

include:

2.9.1. Potential conflicts of interest and apparent no arms-length

relationships;

2.9.2. Any risk factor concerning conflicting registered information;

2.9.3. Possible or existing allegations of criminality;

2.9.4. Any other additional visible potential risk factors.

2.10. Level 4 risk factors are the results of more in-depth audits and

investigations which require the integration of risk factors levels 1 to 3

to be combined with material internal documentation, interviews of

relevant persons, assessing existing allegations that may emanate from

whistle-blowers/complainants/victims or state law enforcement or

Chapter 9 institution-related investigations and results of

internal/external audits and investigations2. Level 4 risk factors consider

level 1 to 3 assessments of associated persons, family members and

business interests held by primary directors.

2 This report does not include this level of risk assessment

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2.11. Level 5 risk assessments lead to the formulation of specific allegations

of misconduct, criminality or unlawful actions. Hypotheses are

developed at this level of risk assessment with a view to give direction,

guidance and a determinable scope for specific investigations. Such

investigations will set out to determine the veracity of such allegations

and collect the relevant evidence in support thereof in the lawfully

required manner. The results of such investigations may be any or a

combination of:

2.11.1. Civil procedural legal action taken to address and remedy issues;

2.11.2. Criminal investigations with a view to seek prosecution;

2.11.3. Internal disciplinary actions.

2.12. In addition to the levels of risk assessments and investigations, legal

analysis, opinions and findings (where relevant) insofar certain identified

transactions are also set out herein.

3. BACKGROUND

3.1. The Public Protector in her “Derailed” Report released on 24 August 2015

found that the tender won by Siyangena Technologies (Pty) Ltd to supply

and install high speed passenger gates at the Nasrec and Doornfontein

stations was improperly extended to cover additional stations3. The so-

called Integrated Security Access Management System (“ISAMS”) Phase

1 was awarded to Siyangena during 2009 in respect of the Nasrec and

Doornfontein stations however this was extended to 7 other stations

across South Africa under the guise that it is urgent for the world soccer

cup. The increase was over R 800 million without any proper

procurement process followed and in stark contrast to the SCM policy of

3 See the Public Protector Report paragraph 1 on page 22 and 23, paragraph 6 from page 159 and paragraph

8 from page 360 and further.

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PRASA. The completion of the stations happened post the world soccer

cup.

3.2. PRASA announced the tender for Phase 2 of the ISAMS project during

2013. One of the bidders was SA FENCE AND GATE. The ISAMS phase 2

project tender was very specific in the required equipment to be

provided and which requirements appear to be structured as to only

benefit Siyangena in the end. In addition, and although the SA FENCE

AND GATE bid was significantly lower than the SIYANGENA bid,

SIYANGENA was the preferred bidder at the end.

3.3. The Public Protector Report was preceded by a criminal complaint that

was lodged by Philemon Makgatlela (Parker) Mamabola during July 2015

on behalf of PRASA and is being investigated by the DPCI under case

reference Hillbrow CAS 405/07/2015. The criminal case inter alia alleges

that the erstwhile GCEO, Lucky Montana (“Montana”) amongst other

allegations, awarded a R 2,9 billion tender to the company, Siyangena

in a fraudulent and corrupt manner. This complaint is narrated in very

general terms and appears to be about the Phase 2 ISAMS PROJECT

tender.

3.4. Prior to the ISAMS PHASE 2 PROJECT tender, SA FENCE AND GATE

INVESTMENT HOLDINGS (SAFNG1) had already secured a tender from

PRASA to provide and install security fencing at 8 depots nationally to

the value of approximately R 209 million. This contract is referred to as

the Fencing Contract for easy reference. The contract between the

parties was signed on 25 March 2013 by Montana.

3.5. After signing the security Fencing contract, the same contract was

expanded and or changed to include perimeter solar lighting at the

various depots referred to above totalling a further R 61 035 144.00

(including VAT). The latter agreement is referred to as the Lighting

Contract.

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3.6. During November 2013, Palello Lebaka (“Palello”), the erstwhile Depot

Modernization Program Executive Manager from PRASA authorized

SAFNG1 to purchase and install the perimeter solar lights at the various

depots.

3.7. On or about 20 August 2014 a Notice to Proceed (“NTP”) forwarded to

SAFNG1 indicated that the initial fencing contract amounting to R 209

million was increased with just over R 47 million which totalled the

contract value close to R 257 million. According to the NTP the request

for the increase from SAFNG1 due to variations on the project in respect

of the contract of R 209m, was approved.

3.8. During January 2015 Martha Ngoye, the then acting GCEO signed off on

a Condonation of Irregular Expenditure in respect of the Perimeter

Lighting on the recommendation of Mr. Josephat Phungula (“Phungula”),

the then Chief Procurement Officer (“CPO”) at PRASA at the time.

3.9. Mr Montana, the erstwhile GCEO after termination of his services from

PRASA during July 2015 lodged a criminal case against PRASA under

case reference Hillbrow CAS 1034/7/2015 implicating PRASA employees

and SAFNG in criminal behaviour.

3.10. A further criminal complaint was lodged against Montana during

September 2015 in respect of the Phase 2 ISAMS PROJECT tender where

it is alleged that the tender was rigged to the advantage of Siyangena.

The case reference is Brooklyn CAS 278/9/2015. These investigations

are ongoing and form part of the investigation under case reference

Hillbrow CAS 405/7/2015.

3.11. The focus of this report is mainly in relation to the PRASA, SAFNG, Top

6 and Beka relationship and will therefore only refer to the ISAMS Phase

1 or ISAMS Phase 2 projects where it may be relevant to the issues

under review.

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4. CORPORATE REGISTRY INFORMATION

4.1. There are two entities under the SA FENCE AND GATE label, namely:

4.1.1. SA Fence and Gate Investment Holdings (Pty) Ltd 2004/031774/07

(SAFNG1); and

4.1.2. SA Fence and Gate (Pty) Ltd 2011/115011/07 (SAFNG2).

4.2. SA Fence and Gate Investment Holdings (Pty) Ltd (SAFNG1)

4.2.1. Per the CIPC records, the company registration number

2004/031774/07 belongs to a company called Suikerbosekwile 001

(Pty) Ltd. The CIPC documents seem not to reflect the name changes

effected in the company over the years but rather still reflect the shelf

name of the company as the current applicable name.

4.2.2. The CIPC document was not properly updated by CIPC to reflect the

most recent name change to SA Fence and Gate Investment Holdings.

The CIPC company history indicates that the company traded as Two

Ships Trading 189 (Pty) Ltd since 2005 and as SA Fence and Gate

Investment Holdings (Pty) Ltd since 2013. This company was

registered on 01 November 2004 and according to the CIPC

information available the company was “voluntary liquidated” on 09

February 2016.

4.2.3. Dewald Olivier (“Olivier”), who is reflected as a director on SAFNG2,

during an interview confirmed that SAFNG1 was voluntarily liquidated

during February 2016. According to him the business of SAFNG1 was

formally transferred lock, stock and barrel to SAFNG2.

4.2.4. The VAT number recorded for SAFNG1 on the PRASA system is

4590219145 however this number appears not to exist in the SARS

registry. This is most probably due to the liquidation of the company.

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4.2.5. Per information obtained from the tender documentation, SAFNG1’s

PSIRA registration number is 1474603. However, per PSIRA’s website,

their registration status is shown as “withdrawn”. This is most probably

due to the liquidation of the company.

4.3. SA Fence and Gate (Pty) Ltd (SAFNG2)

4.3.1. SAFNG2 is a private company with registration number

2011/115011/07 and is recorded by CIPC as ‘In Business’. The private

company was incorporated on 13 September 2011. The VAT number

recorded is 4470261860.

4.3.2. As per SARS confirmation, SAFNG2 has two VAT registration numbers:

SA Fence and Gate (Pty) Ltd Pretoria (Vat No 4470261860) and SA

Fence and Gate - KZN (Vat No 4690268364). This indicates risk of tax

non-compliance.

4.3.3. The registered address for the company is recorded as 322/2 15TH

Road, Ranjiespark, Midrand, Gauteng and registered postal address as

PO Box 22085, Exton Road, Bloemfontein, 9313. This is the address

where SAFNG’s head office is situated.

4.3.4. SAFNG has offices nationally including an international footprint in the

Middle East namely, Wamar International, 4 Al Ri’asah Street, 4th

Circle, Near Prime Ministry, Jabal Amman, Zahar, Jordan. The SAFNG

head office is situated at this address.

4.3.5. The major clients recorded by SAFNG on their website are:

4.3.5.1. Eskom;

4.3.5.2. Anglo Base;

4.3.5.3. Anglo Base Metals;

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4.3.5.4. GSL;

4.3.5.5. TJ Architects;

4.3.5.6. Department of Correctional Services SA;

4.3.5.7. ACSA;

4.3.5.8. P&L Consulting Engineers;

4.3.5.9. Holm Jordaan Architects;

4.3.5.10. Sishen South;

4.3.5.11. Anglo American;

4.3.5.12. Phezulu Fencing;

4.3.5.13. Vodacom;

4.3.5.14. PRASA;

4.3.5.15. Department of Public Works;

4.3.5.16. Transnet, etc.

5. RISK ASSESSMENT / EVALUATION / INVESTIGATIONS

5.1. Level 5 Risks

5.1.1. SA Fence and Gate Investment Holdings (SAFNG1) secured a contract

to supply security fencing to PRASA depots nationally following on a

tender process to the value of approximately R 209 million4.

4 The contract number is HO/SCM/225/11/2011. The contract was signed by PRASA on 25 March 2013.

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5.1.2. According to the scope of work SAFNG1 had to provide an integrated

security system to various PRASA depots which included the following

key aspects:

5.1.2.1. Specialized Fencing;

5.1.2.2. Motion Detection System (that monitors movement and access to

the fence);

5.1.2.3. Closed Circuit Television (CCTV);

5.1.2.4. Alarm System;

5.1.2.5. Security Monitoring System (from a Central Operations Centre).

5.2. This is the company that was voluntarily liquidated during February

2016.

5.3. The above security fencing contract between the parties was signed by

the GCEO, Montana on 25 March 2013 and was promptly followed by a

Recommendation Report from the CPO, at the time namely, Chris

Mbatha requesting the GCEO (Montana) to approve the payment of the

10% mobilization fee to SA Fence and Gate which amounted to R

20 987 455,98 in order to accelerate the implementation of the project.

5.4. A Remittance Advice dated 26 March 2013 from PRASA in favour of

SAFNG Investment however with company registration number

2011/115011/07 which is SAFNG2’s registration number and with

Vendor Number 108452, refers to payment to the service provider

SAFNG. The Remittance Advice refers to invoice number INV0011002

and reflects the amount paid as R 20 987 455,98 (which constitutes the

10% mobilization fee). The mobilization fee was paid by PRASA into the

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account of SAFNG2 and not into the account of SAFNG1 which was the

entity which signed the contract with PRASA.

5.5. This was an internal failure of systems of PRASA creating a clear and

identifiable risk for PRASA when paying a third-party entity not party to

the contract. This payment was irregular.

5.6. On 3 June 2013 Palello directed an email to a number of persons from

SA FENCE AND GATE and various internal PRASA staff regarding the

above fencing and security project’s first meeting on 5 June 2013

“where the details requirements going forward will be spelt out in

detail”. In addition, he requested George Els (“Els”), Chief Operations

Officer from SA FENCE AND GATE to inform “Allister” to attend (should

most probably be Alisdair – more detail below).

5.7. In reply, on 4 June 2013, William Murray (“Murray”), the Business

Development Director from NAMEC Electronic Manufacturing confirmed

that Alisdair Macdonald (“Alisdair”) will be attending the meeting the

following day as well as attending the site visits on 6 and 7 June 2013.

Alisdair appeared to be working with Murray as he was copied into the

mail at [email protected].

5.8. Murray at the same time copied Thobani Msimang (“Msimang”) from

Tmang Consulting into the mail at [email protected]. Msimang

replied as follows:

“Dear William

The discussion should be kept more technical at this stage to develop

the spec and to quantify the business. Commercial discussions will

be managed and concluded by myself. This will be guided by your

technical recommendations. (Own emphasis)

Regards,

Thobani”

mailto:[email protected]


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(More detail below in respect of emphasized portions above)

5.9. Els was adamant during our interview with SAFNG that he was only

physically introduced to Alisdair by Palello for the first time when they

attended a meeting at PRASA in a 13th floor boardroom at Umjanji

House, Braamfontein during the initial stages of the process. As far as

SA FENCE AND GATE is concerned they allege that Alisdair was made

part of the process by Palello who indicated that Alisdair will assist with

the scoping and design of the solar lights for the lighting project.

5.10. The project “kick–off” meeting held on 5 June 2013 at Umjantshi House

(PRASA) confirm the attendance of Alisdair representing NAMEC. The

minutes indicate that the kick off meeting was indeed held on the 13th

floor at PRASA.

5.11. During our interview with Alisdair he was adamant that he met all the

parties involved at the first meeting at PRASA. He indicated that if he

remembers correctly a certain Thobani Msimang (“Msimang”) from

Tmang Consultants CC (2003/019837/23) arranged his involvement in

the lighting project. Msimang is the only member of Tmang. Alisdair

however initially attended the matter under the NAMEC TECHNOLOGIES

umbrella which explains the email address used.

5.12. However according to Alisdair the NAMEC involvement was short lived

when the CEO Vijay Panday allegedly misappropriated large funds of

money from the business. These allegations were covered in the media

at length. Both Alisdair and Murray left the NAMEC stable at the time

and are still involved with a business called Lormark CC

(1997/047367/23) where Alisdair is the only member.

5.13. Alisdair confirmed that he was involved in the scoping and design of the

solar perimeter lights on the project.

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5.14. Alisdair indicated that although he only met Lucky Khumalo (“Khumalo”)

from Top 6 Holdings towards the end of his (Alisdair’s) involvement in

the project, Msimang informed him early on of Top 6’s involvement in

the project. If he remembers correctly Msimang early on in the process

told him that Top 6’s involvement was delayed due to the delay in the

registration of the company.

5.15. Top 6 Holdings with registration number 2013/126011/07 was only

registered on 25 July 2013 which seems to corroborate Alisdair’s

comments regarding their involvement and that the company still had

to be registered. Msimang is a director of this company Top 6 as well.

5.16. The procurement of a company which was still to be registered and

which does not have a trading history defies the logic. Apart from the

risk exposure to PRASA at the outset, the suspicions of possible criminal

activities become very real.

5.17. Although the “Kick Off” minutes on 5 June 2013 are silent about the

lighting it is obvious that this was part of the mix especially having

regard to the fact that Alisdair’s involvement was primarily to scope and

design the lighting required at the various depots. PRASA site visit

minutes for example confirm his attendance at the depots nationally. It

would appear as if the fact that Top 6 would be super imposed between

SAFNG and the lighting supplier was already planned at the outset of

the fencing project or at least since May 2013 when the ex PRASA

employee Palello got involved in the project.

5.18. On 7 June 2013 Els emails the initial proposed site visiting travelling

plans to various interested parties at PRASA and included Alisdair. The

mail this time is forwarded to [email protected]. According to the

records available, he was appointed as member to Lormark CC on

5 January 2000.

5.19. The above scope of work did not provide for the installation of lights at

the different depots identified which under the circumstances may have


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hindered achieving the optimum objective set out in the beginning of

the project namely that the CCTV camera system function optimally

however the process followed was highly irregular and suspect. The

perimeter solar lights should have formed part of the original tender for

the security fencing.

5.20. It would seem as if the perimeter lights were an issue from early on in

the process as is evident already on 11 June 2013 when Palello via email

enquires from Els whether he “has received an estimate for the

lightning”?

5.21. The allegation that Alisdair was involved with the scoping of the lights

and arranging even the quote estimates was confirmed when Els replied

on the same day at 7:59 pm that “I have not received any estimate yet.

I will contact Alisdair first thing in the morning” (own emphasis).

5.22. Vernon Dinkelman (Project Manager from SA FENCE AND GATE)

(“Dinkelman”) on 10 July 2013 sent an email to Alisdair with the

following contents:

“Hi Alisdair

Following on from our discussion. I don’t have the luxury of asking when

you will have the lighting pricing for us, I have to let you know that we

need the lighting pricing by close of business today. The BOQ revised

deadline is Thursday (already moved out by a week). Please!

I am also not sure how I need to get pricing from your suppliers or they

need to get to me? We could probably source our own lighting? Nobody

from your supplier has contacted me yet?

Please get back to me at your earliest convenience.

Kind Regards”

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This email was copied to Els, Kersagan Reddy (PRASA), Palello and

Xoliso Kupiso (PRASA).

5.23. Els, during our interview, alleged that he got a call from a person who

stated that he was from a company called Top 6 and that he was calling

in respect of the PRASA lighting project. Els believes that it was Khumalo

from Top 6 that called him although he cannot be a 100% sure. Els

subsequently contacted Palello who confirmed that SA FENCE AND GATE

must use Top 6 to provide the lighting as they (Top 6) were preferred

suppliers of PRASA. In other words, PRASA (Palello) nominated Top 6

as the preferred supplier of the lights.

5.24. Unbeknown to SAFNG, Top 6 however was not registered at PRASA as

a supplier to PRASA. This appears to be a blatant misrepresentation by

Palello to ensure the import of Top 6 as supplier and confirmed

Msimang’s statement that Top 6 will be involved in the project (provision

of the lights).

5.25. A letter from TMang Consulting/Consultants dated 1 July 2013 and

addressed to SA FENCE AND GATE with the subject matter “Proposal for

the installation of a lighting solution for the PRASA 8 Depot Security

program” indicates that their technical teams have been working with

SA FENCE AND GATE as well as PRASA to establish the requirements of

each site. This was the job of Alisdair from Lormark. The author of the

letter is Msimang, MD of Tmang Consultants.

5.26. The actual lighting proposal with pricing attached however is dated

13 July 2013. The proposal in all probability was therefore submitted

only on the 13th although the cover letter is dated 1 July 2013.

Msimang’s pre-involvement with PRASA and most probably with Palello

prior to the lighting project appears to be continually confirmed.

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5.27. The fact that Dinkelman queries the availability of the quote on 10 July

2013 confirms the date of the letter and quote was most likely on or

about the 13th.

5.28. The above lighting proposal contains two options. Option 1 details Beka

(Pty) Ltd (“Beka”) as the technology partner in SA whereas option 2

refers to Bloxwich a Malaysian multinational company which is chosen

to supply the lights whereas Namec Electronics and Manufacturing is

chosen as the technology partner in SA. Part of the proposal refers to

Lormark Power Housing and Lormark Solar Panels.

5.29. According to Alisdair, he believes that the moment TMang received the

designs for the lights, his relationship was terminated. He indicated that

if he remembers correctly he was paid by Top 6 and he was also short

paid for the job he did.

5.30. A Pricing Submission from SAFNG1 to PRASA dated 15 July 2013 for the

attention of Palello quotes the pricing from the Beka option plus ten

percent.

5.31. The 10% added to the quote seem to confirm the comment by Msimang

namely that “commercial discussions will be concluded and managed by

myself” which comment is contained in his email dated 4 June 2013 to

Murray and the “more technical detail” most probably referred to

Alisdair’s involvement in the lighting project. At the time of this email

the company Top 6 was not yet registered.

5.32. Palello subsequently submitted a Project Change Request Form dated

23 July 2013 to Xoliso Kupiso (“Xoliso”) wherein he motivated the

necessity for the perimeter lighting as part of the National Fencing and

Security Project contract allocated to SA FENCE AND GATE at an extra

cost of R 53 439 600.00 (excluding Vat which with Vat Total R

61 035 144.00). This amount corresponds with the Pricing Submission

from SA FENCE AND GATE addressed to Palello on 15 July 2013.

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5.33. The Project Change Request Form was signed during August 2013 by

the following parties:

5.33.1. Project Manager: Xolisa (signed 12/08/2013);

5.33.2. SM: SCM: Mr Godfrey Sonny (signed 12/08/2013);

5.33.3. Project Sponsor: Palello (signed 13/08/2013);

5.33.4. CEO PRASA Tech: Mr Saki Zamxaka (signed 14/08/2013).

5.34. The Request Form was however not signed off and approved by the

Acting Group Chief Financial Officer (GCFO) at the time Mr Fenton

Gastin. The process followed was in any case highly irregular.

5.35. During this time, on 16 August 2013, Dinkelman, the Project Manager

wrote an email to Xoliso asking him who the preferred lighting supplier

was that PRASA instructed them to use. SAFNG maintained that they

were instructed by PRASA to use a company called Top 6 to supply the

lights quoted on by Beka. Dinkelman knew PRASA nominated the

supplier but at that stage he was not sure of the details. Els replied that

he had received the information already and apologises for not

communicating same with Dinkelman sooner.

5.36. During the interview with Olivier (the current Chief Operating Officer of

SA FENCE AND GATE) and Els (from SA FENCE AND GATE), they further

indicated that shortly after they were visited by Mr Lucky Khumalo and

Mr Sipho Shezi from Top 6 they signed the Supplier Contract between

Top 6 and SAFNG1 on 10 September 2013. Mr Khumalo signed the

contract on behalf of Top 6 which confirmed that the Beka option of

lighting will be pursued.

5.37. Top 6 entered into a Standard Conditions of Sale Agreement with Beka.

Although the pro forma document appears to be created during 2011 it

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would appear as if the parties to the agreement signed during November

2013.

5.38. It would appear as if PRASA undertook a site visit to Beka on

15 November 2013. The short memo in this regard indicated that the

lights for PRASA were not yet available.

5.39. During about mid-April 2014, the lights were all apparently available for

collection subject to the full payment being made by Top 6. There were

approximately 2000 lights of which only about 6 were delivered

according to a PRASA employee Piet Swart who was appointed Project

Manager of the SAFNG project soon after Palello’s services were

terminated by PRASA. It was requested that they split the order into 6

invoices, however it was made clear that this was one order. The lights

would only be released once full payment had been made. Between

February 2014 – May 2014 seven payments were made by Top 6 to

Beka.

5.40. Beka repeatedly informed Top 6 that the lights are available but it

became increasingly apparent that there was a disagreement between

Beka and Top 6. During this dispute and to try and resolve the problem

Werksmans (who are representing Beka) met with BBM Attorneys

(SAFNG’s lawyer Reddy was one of the attorneys), 2 Top 6

representatives (Thobani Tobias Msimang & M Ntobella) and their legal

team. Msimang’s involvement has come full circle being involved from

the beginning right up to the end.

5.41. A settlement agreement was entered into and reduced to writing in this

meeting. As the representatives of Top 6 had to leave they allegedly

nominated their attorneys to sign on their behalf. Top 6 subsequently

apparently alleged that their attorneys did not have the mandate to sign

the settlement on their behalf. The lights are currently still believed to

be stored in a warehouse at Beka. PRASA has paid millions towards this

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project without result. The process followed was highly irregular which

resulted in irregular payments.

5.42. During April 2014 Palello responded in an email to his colleagues at

PRASA regarding the lighting project – he clearly indicates that when he

received the fencing project during May 2013, he immediately realized

that the “PRASA requirement Specification” was not enough and he

requested the contractor (SAFNG1) to supply “pricing for the perimeter

lighting”. It would appear from this as if he initiated the extension of

the fencing contract to include the lighting. The fact is that Palello does

not follow due process.

5.43. SAFNG believe that their April 2014 NOTICE OF CONCERNS REPORT in

respect of the ISAMS Phase 2 project with supporting documents which

outlined the irregularities of the tender and tender process and which

was submitted to PRASA management ultimately resulted in the letter

from PRASA terminating the security fencing contract during May 2014.

It should be noted that the termination was followed by NTP’s on 20

August 2014 and 1 October 2014 and a “final” termination letter on 9

June 2015 from PRASA to SAFNG due to non-fulfilment by SAFNG of the

revised time schedules and related problems.

5.44. According to SAFNG they, in respect of the security fencing contract,

formally submitted to PRASA 108 Requests for Information over a two-

year period of which 94% were unresolved due to PRASA’s inaction. In

addition, they formally submitted 28 Contractual notifications dating

from 29 May 2013 to PRASA of which only one has been responded to

by PRASA. According to SAFNG this explains the reason for the cost

increase and delays on the fencing contract and not as noted by PRASA.

5.45. The erstwhile PRASA employee, Palello was disciplined for the irregular

extension/change of the fencing contract to include the perimeter

lighting and was subsequently dismissed from PRASA.

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5.46. Montana, the erstwhile GCEO after termination of his services from

PRASA during July 2015 lodged, what appears to be, a counter criminal

complaint against inter alia:

5.46.1. Mr Popo Molefe (“Molefe”) [PRASA Chairman of the Board];

5.46.2. Martha Ngoye (“Ngoye”) [PRASA Legal];

5.46.3. Palello;

5.46.4. Phungula [erstwhile PRASA Group Chief Procurement Officer]; and

5.46.5. SAFNG1.

5.47. The complainant in the criminal matter, Montana inter alia alleges that

SAFNG1 colluded with the erstwhile employee, Palello to lodge a large

claim of R 47 million against PRASA and which claim was apparently

paid by PRASA. This amount appears to refer to the amount of the

increase on the R 209 million security fencing contract. This amount was

authorised by the Board.

5.48. In addition, Montana questions the services and product provided to

PRASA by alleging that they (SAFNG1) provided sub-standard services

and product to PRASA.

5.49. Montana further alleges that the contract was irregularly increased by a

further amount of approximately R 58 million to include the perimeter

lighting which Martha Ngoye (PRASA Legal) in her position as Acting

GCEO at the time allegedly unlawfully signed off and approved during

January 2015.

5.50. It is further alleged by Montana that Molefe was in a corrupt relationship

with SA FENCE AND GATE who donated funds towards Molefe’s

foundation by donating money to the foundation’s golf day.

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5.51. During our interview with SA FENCE AND GATE during March 2017 we

were advised that they are preparing for the arbitration hearing against

PRASA in respect of the monies owing to them flowing from the original

fencing and security contract. The amount outstanding runs into millions

according to SAFNG.

6. NOTABLE CORPORATE INTERESTS OF DIRECTORS

6.1. GEOFFREY EDWARD GREYLING (ID NO: 6510145163087)

6.1.1. SAFNG forms part of a group of companies under the SASSTEC group

of companies. The company Integritron Solutions and Technologies

(Pty) Ltd for example has featured in the media on numerous occasions

when they allegedly came under the spotlight when NEWS24 inter alia

first reported that National Treasury raised queries about the tender

procurement process followed by the Department of Correctional

Services when awarding the multi-million Inmate Management System

contract to them.

6.2. MOYA CANDLISH NAPE (ID NO: 7705085287081)

6.2.1. Moya Candlish Nape has an interest in SAFNG and had an interest in

Hages Infosystems which are current suppliers to PRASA. He resigned

from Hages Infosystems on 1 April 2013.

6.2.2. Hages Infosystems is recorded to be a current supplier to PRASA who

invoiced PRASA R11,529,416.00 thus far. The following supplier codes

have reference:

6.2.2.1. 108125;

6.2.2.2. 112375;

6.2.2.3. 112376;

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6.2.2.4. 112377;

6.2.2.5. 113145.

6.2.3. Krishnan Rajesh Thampy, a director is a former employee of PRASA

with employee no 20100023 – employed from 01 April 2010 to

16 October 2010 as a Senior Manager at PRASA Corporate. This

person seems to be a foreigner.

6.2.4. Mobile number 0836013683 being used by Krishnan Rajesh Thampy is

also used by Tebogo Bopape (Id No 8705165942083) who is an active

Director of Moloteka Rail (company registration no 2012/215607/07)

who is trading as Zithama Investments. Dennis Bowles who is not only

the Senior Manager Projects at Zithama Investments dealing with

railway infrastructure engineering, but was also involved at Actom

Transportation as a Contract Manager, managing the Contract Division

in delivering Signalling Upgrades for PRASA, various Mines and

Transnet.

6.2.5. Kumar Abhishek, Signalling Engineer at Zithama Investments, was

involved in the PRASA Railcom Project as a Project Manager for

Siemens and then again on the ISAMS Project for Siyangena

Technologies.

6.3. PAULUS MOLETSANE (ID NO: 7509085514084)

6.3.1. Paulus Moletsane has an interest in various corporate entities which

have no interest at PRASA apart from SAFNG.

6.4. DEALINGS WITH PRASA

6.4.1. SAFNG is a service provider to PRASA with supplier numbers 108452,

109330 and 111663.

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6.4.2. It would seem from research from sources available that SAFNG,

during the period between 26 March 2013 to 08 June 2013, invoiced

PRASA about a 187 times for a sum of approximately R

350 242 665.54. PRASA made 30 payments to SAFG in the amount of

R 288 820 544.56 (short payment of -R 61 422 120.98) from what

was invoiced and generated between 05 April 2013 to 18 July 2016.

Except for the mobilisation fee which was paid into the SAFNG2

account, it would appear as if the rest of the funds paid were paid into

the SAFNG1 account.

6.4.3. It would further appear as if SAFNG1 was created and registered as a

service provider on PRASA’s supplier database on 05 April 2013. It

would therefore appear from the information available as if SAFNG1

invoiced PRASA before they were created on the system and started

to receive remuneration on the same day.

6.4.4. Various inconsistencies with regards to invoicing / payments were

identified such as possible duplicate invoicing, bulk invoicing on the

same day, bulk invoicing on Sundays. These potential inconsistencies

are just some red flags which may or may not point to possible

problems and require further investigation.

6.4.5. The following diagram shows differences / inconsistencies between

Invoice and Purchase Order Amounts and VAT between Quotes and

Invoice Amounts:

Doc Type Total

Total on Quotes 29 453 434,44

Total on PO's 29 453 434,44

Total on Invoices 30 167 051,07

Difference between PO's & Invoices 713 616,63

Vat on Invoices 3 704 725,57

Vat on Quotes 3 617 088,44

Difference between VAT on Quotes and Invoices 87 637,13-

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7. SCM PROCESS

7.1. In principle, it would appear as if the lighting project was a good and

essential idea to enhance the security fencing project which raises the

question as to why Palello did not follow the proper channels.

7.2. The process followed by PRASA and in particular by Palello was however

irregular and resulted in later attempts to condone the irregular

expenditure incurred by PRASA and to finish the enhancement of the

security fencing at the depots.

7.3. The erstwhile employee Palello was taken to task and dismissed

following upon a disciplinary hearing.

7.4. The Condonation Document dated January 2015 indicated that the

implemented project scope did not include the procurement and

installation of lights which would enhance the visibility and quality of

images transmitted to the control room. The lights were apparently

necessary for the effective functioning of the deployed security system.

The document seeks to condone the already paid out amount of

R 33 833 032.00 and to pay the further R 24 320 264,72 required to

fulfil the lighting job. The CTPC meeting resolved that the submission

be supported and elevated to the GCEO for approval. The acting GCEO

(Martha Ngoye) signed the condonation on 20 January 2015.

7.5. On 1 December 2015, the matter of Condonation of the perimeter lights

was re-visited by PRASA. A further motivation is submitted to the then

Acting GCEO to approve. According to this document the PRASA Supply

Chain Management Policy and the PFMA were contravened.

7.6. The document explains that the original fencing project amounting to

R 209 874 559.80 was approved by the PRASA Board. Subsequently the

Board approved a variation of R47 083 730.37 resulting in a new

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contract value of R 256 958 290.17. The lights variation amounting to

R 58 153 296.72 was submitted to the Acting GCEO and approved

during January 2015.

7.7. However Internal Audit recommended that the variation must be

submitted to the Board for approval due to the fact that the combined

value of the contract falls within the delegation of the Board. The

approval of the condonation will increase the contract to

R 315 111 586.89. This motivation dated 1 December 2015 therefore

requested Board approval to condone the variation.

7.8. At the time the Acting Chief Procurement Officer, Mr. Mbulelo Gingcana

indicated that he did not support the above request indicating that the

matter was under investigation by Treasury.

7.9. What is abundantly clear is that the policy and processes were not

adhered to and followed.

8. CONCLUSIONS AND RECOMMENDATIONS

8.1. Xolisa Kupiso (ex PRASA Project Manager) – as per a whistle blower

report in the media, and who was very much involved with the fencing

and lighting project left PRASA and was allegedly employed by SAFNG.

According to SAFNG he was never employed at SAFNG at any stage

however he was apparently part of a business that rented premises

across from their Midrand offices which business supplied sewage

pumps.

8.2. SAFNG1 as a provider of security fencing is required to be registered at

PSIRA. The contracts were secured through SAFNG1 which company

appears to be no longer compliant as far as their PSIRA registration is

concerned. This may be as a result of their liquidation. The liquidation

of SAFNG1 and the factors surrounding the liquidation require a close

look at especially in view of the fact that it is SAFNG1 that was the

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contracting party to the original fencing contract. The original fencing

contract requires prior written consent from the PRASA GCEO where

there is any change in the composition of the contractor or where the

contractor assigns the contract (see clause 2 of the fencing agreement

in this regard). Were any of these formalities complied with when

SAFNG1 transferred the contracts to SAFNG2?

8.3. According to the records available the initial mobilization fee (R

20 987 455,98) was not paid to SAFNG1 but to SAFNG2. The money

was supposed to be paid to SAFNG1 as SAFNG2 was not a party to the

fencing contract at the time. This was an irregular payment.

8.4. Although the lighting contract appears to be a necessary requirement

the process followed was irregular and thus still constituted irregular

expenditure.

8.5. The fact that Msimang appears to be pivotal to the lighting transaction

with PRASA is a matter for concern as Msimang headed up Tmang

Consultants who apparently brought in Alisdair to do the scoping in

respect of the solar lighting. This seems to be done with the approval of

Palello. Msimang informs Alisdair that Top 6 will deal with the matter

going forward. Tmang submits a quote to SAFNG1 which reflects two

options.

8.6. Top 6 calls SAFNG which involvement is confirmed by Palello. Top 6

“takes over” the deal. Msimang not only has an interest in Tmang

Consultants but is also noted as a director of Top 6, which company

ultimately was super imposed in the deal between SAFNG and Beka at

a 10% increase to provide lighting to PRASA and which Palello agrees

to. According to Els he telephonically spoke to Palello, who confirmed

that they had to work through Top 6 to buy the lights.

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8.7. During numerous discussions with Palello, although quite helpful in

respect of other matters within PRASA, he was rather silent regarding

the above matter maintaining that he was unfairly dismissed.

8.8. In retrospect, it would seem as if the transaction was “forced” through

without following proper process specifically as the project now seems

to have been predetermined to favour Top 6 to the prejudice of PRASA.

8.9. The process of super imposing Top 6 into the lighting transactions

appears to be highly irregular if not criminal. On the face of it, Top 6

was merely super imposed between SAFNG AND BEKA with what

appears to be the co-operation of Palello and Msimang to enrich Top 6

with a 10% payment over and above the value of the lights.

8.10. Although Palello was disciplined and his services subsequently

terminated, it would appear as if there may well have been more to the

transaction than a mere irregular process however this aspect should

be investigated by the police.

9. RECOMMENDATIONS WITH RESPECT TO CONTINUED CRIMINAL

INVESTIGATIONS GOING FORWARD

9.1. Having regard to the content of this report, read in conjunction with the

other investigative reports holistically, it is recommended that the

offences of racketeering in terms of the Prevention of Organised Crime

Act 121 of 1998 (POCA) as amended be considered. The reasons

underpinning this recommendation are set out herewith:

9.1.1. It must be noted that the recommendations require a collective perusal

and consideration of all relevant investigative reports and link analysis

charts in this regard.

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9.1.2. By way of background: The intentions of the legislature in introducing

POCA (and relevant to this recommendation) were; to introduce

measures including combating organised crime, money laundering and

criminal gang activities; to prohibit certain activities relating to

racketeering activities; to provide for the prohibition of money

laundering and for an obligation to report certain information; to provide

for the recovery of the proceeds of unlawful activity; to provide for the

establishment of a Criminal Assets Recovery Account; to amend the

International Co-operation in Criminal Matters Act, 1996; to repeal the

Proceeds of Crime Act, 1996; to incorporate the provisions contained in

the Proceeds of Crime Act, 1996; and to provide for matters connected

therewith.

9.1.3. The sections of POCA relevant to this recommendation are Sections 2

(1), 4 and 6:

“2. Offences - (1) Any person who:

(a) (i) receives or retains any property derived, directly

or indirectly, from a pattern of racketeering

activity; and

(ii) knows or ought reasonably to have known that

such property is so derived; and

(iii) uses or invests, directly or indirectly, any part of

such property in acquisition of any interest in, or

the establishment or operation or activities of,

any enterprise;

(b) (i) receives or retains any property, directly or

indirectly, on behalf of any enterprise; and

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such property derived or is derived from or

through a pattern of racketeering activity,

(c) (i) uses or invests any property, directly or

indirectly, on behalf of any enterprise or in

acquisition of any interest in, or the

establishment or operation or activities of any

enterprise; and


such a property derived or is derived from or

through a pattern of racketeering activity;

(d) acquires or maintains, directly or indirectly, any interest

in or control of any enterprise through a pattern of

racketeering activity;

(e) whilst managing or employed by or associated with any

enterprise, conducts or participates in the conduct,

directly or indirectly, of such enterprise’s affairs through

a pattern of racketeering activity;

(f) manages the operation or activities of an enterprise and

who knows or ought reasonably to have known that any

person, whilst employed by or associated with that

enterprise, conducts or participates in the conduct,

directly or indirectly, of such enterprise’s affairs through

a pattern of racketeering activity; or

(g) conspires or attempts to violate any of the provisions of

paragraphs (a), (b), (c), (d), (e) or (f), within the

Republic or elsewhere, shall be guilty of an offence.

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4. Money Laundering:

Any person who knows or ought reasonably to have known that

property is or forms part of the proceeds of unlawful activities and –

1. enters into any agreement or engages in any arrangement or

transaction with anyone in connection with that property,

whether such agreement, arrangement or transaction is

legally enforceable or not; or

2. performs any other act in connection with such property,

whether it is performed independently or in concert with any

other person,

which has or is likely to have the effect –

(i) of concealing or disguising the nature, source, location,

disposition or movement of the said property or the

ownership thereof or any interest which anyone may

have in respect thereof; or

(ii) of enabling or assisting any person who has committed

or commits an offence, whether in the Republic or

elsewhere-

(aa) to avoid prosecution; or

(bb) to remove or diminish any property acquired

directly, or indirectly, as a result of the

commission of an offence,

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shall be guilty of an offence”.

6. Acquisition, possession or use of proceeds of unlawful activities. –

Any person who –

(a) acquires;

(b) uses; or

(c) has possession of,

property and who knows or ought reasonably to have known that

it is or forms part of the proceeds of unlawful activities of another

person, shall be guilty of an offence”.

9.2. In reading the three sections of POCA above, the following definitions

as contained in Section 1 thereof are also relevant:

9.2.1. “Enterprise” includes any individual, partnership, corporation,

association, or other juristic person or legal entity, and any union or

group of individuals associated in fact, although not a juristic person or

legal entity;

9.2.2. “Pattern of racketeering activity” means the planned, ongoing,

continuous or repeated participation or involvement in any offence

referred to in Schedule 1 and includes at least two offences referred to

in Schedule 1, of which one of the offences occurred after the

commencement of this Act (POCA) and the last offence occurred within

10 years (excluding any period of imprisonment) after the commission

of such prior offence referred to in Schedule 1;

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9.2.3. “Proceeds of unlawful activities” means any property or any

service, advantage, benefit or reward which was derived, received or

retained, directly or indirectly, in the Republic or elsewhere, at any time

before or after the commencement of this Act, in connection with or as

a result of any unlawful activity carried on by any person, and includes

any property representing property so derived;

9.2.4. “Unlawful activity” means any conduct which constitutes a crime or

which contravenes any law whether such conduct occurred before or

after the commencement of this Act and whether such conduct occurred

in the Republic or elsewhere.

9.3. In light of the above, it is clear that POCA intends to deal with organised

racketeering of entities irrespective of the various parts played by

persons associated with such enterprise in achieving the object of their

collective conspiracy to commit a particular crime or a series of crimes.

9.4. The starting point in considering the recommendation to institute

charges of racketeering as defined and provided for in POCA would be

the fact that the requirements described in Section 2 (1) of POCA (as

set out above) would have to be met in evidence.

9.4.1. These require the ability to demonstrate that the various suspect

individuals and entities were all active in different capacities, in one

manner or another, and involved in an illegal enterprise.

9.4.2. The respective reports have to be read in conjunction in order to

comprehend the scale and range of criminal activities that are alleged

to have been committed. In addition, the relevant link analysis charts

need to be taken into account simultaneously.

9.4.3. Read collectively as recommended, the reports and link analysis make

a prima facie case which identifies the persons and entities, underlying

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criminal offences and show all to have had the intended purpose to

facilitate the multiple instances of fraud, corruption, money laundering

and other unlawful activities or a combination thereof and as described

in schedule 1 of POCA, for the benefit of the criminal enterprise.

9.5. The reports which display the progress made on the multiple cases

depict the various stages of investigation and collection of evidence

(even when having regard for the limitations ensued as a result of the

lack of the Directorate of Priority Crimes Investigations and/or the

National Prosecuting Authority in exercising their persuasive powers,

such as subpoenaing and analysing bank account statements of the

relevant periods and other third parties, obtaining witness statements

and warning statements from suspects and/or conducting search and

seizure warrants) collectively comprise prima facie evidence which the

state can rely upon to institute several charges of racketeering against

the identified entities and individuals. Common categories of activities

which are demonstrated throughout all the reports and which must be

read in conjunction with each other in order to consider such charges

include:

9.5.1. Instances where invoices for payment were submitted for the same

delivery of services and/or goods on more than one occasion – alleged

fraud and corruption;

9.5.2. Instances where suppliers of services and/or goods were registered as

suppliers on multiple occasions and within multiple parts of PRASA –

alleged fraud and corruption;

9.5.3. Instances where payments were given effect to for services not

rendered – alleged fraud and corruption;

9.5.4. Instances where contracts were entered into contra the legal

requirements of PRASA – alleged fraud and corruption;

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9.5.5. Instances where suppliers to PRASA were registered as suppliers under

one name or legal status interchangeably e.g as CC or Pty(Ltd) – alleged

fraud and corruption;

9.5.6. Instances where payments from PRASA to suppliers were diverted from

one entity or person to another in a concealed fashion – alleged money

laundering;

9.5.7. Instances where suppliers to PRASA presented themselves to be based

at particular addresses as functioning entities, when in fact they could

not be traced to those addresses – alleged fraud;

9.5.8. Instances where individuals and entities received the benefits of

proceeds of organised crime;

9.5.9. Instances where the financial proceeds of unlawful activities were

utilised by persons to acquire moveable and immovable property;

9.5.10. Instances where the proceeds of organised crime or unlawful activities

were diverted from one entity or person to another;

9.5.11. Instances where persons with conflicts of interests or potential conflicts

of interest participated in activities and/or decisions and/or giving effect

to payments, which resulted in unlawful direct or indirect benefits to

third parties associated to them – alleged fraud, corruption and money

laundering.

9.6. Insofar the recommendations as set out above, PRASA has written to

both the Head: Directorate of Priority Crimes Investigations and the

National Director of Public Prosecutions of the National Prosecuting

Authority, requesting for the declaration of the investigations as priority

crimes and to consider the issuance of a certificate for an investigation

of racketeering.

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9.7. Unfortunately, any further attempts to see this process through to its

logical conclusion have not borne any fruit from the side of PRASA and

its legal representatives.

9.8. Having said this, there is no reason why the National Director of Public

Prosecutions of the National Prosecuting Authority may not still consider

these requests at any given point in time going forward.

9.9. It is strongly recommended that the requests referred to be pursued

until the National Director of Public Prosecutions of the National

Prosecuting Authority takes a stance either way. Such a decision would

dramatically impact on the continued paths for the investigations, as it

would result in each instance having to be treated as separate and

unconnected offences, and presented by way of criminal complaints and

prosecutions accordingly. Should such a scenario occur, various legal

ramifications may ensue which would hamper successful prosecutions

significantly, simply because of the overlapping nature of the reported

activities, alleged crimes, and common suspects and methodologies as

set out in the respective investigative reports.

10. CONCLUSION

10.1. Should PRASA wish to investigate this matter further, the investigation

in this regard will comprise, inter alia:

10.1.1. Unpacking the agreements entered into with these various entities to

determine whether the work contracted and paid for was in fact

completed by each such entity and to the satisfaction of PRASA;

10.1.2. The PRASA employees involved in the compilation, motivation,

recommendation and approval of the Memos and their relationships,

if any, with the entities must be investigated;

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10.1.3. Should the investigation reveal any impropriety on the part of any

employee, the appropriate disciplinary action would be recommended

as well as any other proceedings which may be appropriate in the

circumstances;

10.1.4. Should the investigation reveal that no value was in fact received by

PRASA, the appropriate legal steps would need to be considered

relating to the possible setting aside of contracts with the

concomitant actions to recover monies and lodging of criminal

complaints.

11. It must be noted that the levels of complexity and sheer volumes of

evidence that is required to be considered, reviewed and concluded to

bring these matters to conclusion, will prove a challenge to even the state’s

law enforcement agencies today. Notwithstanding this challenge, it is

incumbent upon PRASA to properly and fully investigate these matters so

that from an operational perspective, all identified irregularities are

addressed and appropriate legal procedures are followed to both protect

and enforce PRASA's rights.

SIX HOLDINGS (“TOP 6”)/BEKA-SCHRÉ INTRODUCTION

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Transcript of SIX HOLDINGS (“TOP 6”)/BEKA-SCHRÉ INTRODUCTION